The Central Bank of Kenya’s Pension Fund has bought a stake in Uganda’s power distributor, Umeme, giving it a place among the top 10 shareholders at the power utility firm.

Umeme’s latest interim financial statements for the half year ended June 2013, show that the pension scheme, which belongs to the staff of Kenya’s banking regulator, held 13.075 million shares or a 0.81 per cent stake in the power distributor as at the end of the said period.

It is, however, not clear whether the pension scheme bought the shares by participating in Umeme’s initial public offer (IPO) at the Uganda Securities Exchange (USE) in November last year, then increased its stake between January and June this year.

But the CBK’s pension fund was not listed among Umeme’s top 10 shareholders for the period ended December 2012.

The CBK pension fund is now Umeme’s tenth single largest shareholder.

The Umeme share purchase is the latest in a string of investments that the CBK Pension Fund has been making in companies listed on the USE.

The pension funds was listed as the seventh single largest shareholder of DFCU Bank with 2.53 million shares or 1.02 per cent stake. It is also listed as the fifth largest single shareholder in Stanbic Bank Uganda with 206.7 million shares or a 0.4 per cent stake for the period ended December 2012.

DFCU’s single largest shareholders list includes Bank of Uganda’s Staff Retirement Benefit Scheme, which had 1.45 million or a 0.58 per cent stake, Bank of Uganda Staff Retirement, which held 855,520 shares or a 0.34 per cent stake and Kenya Airways Provident Fund which held 957,000 shares or a 0.38 per cent stake.

Pension schemes in Kenya have over the past six months increased their investments in equities and offshore assets and decreased funds invested in fixed income according to the latest pension schemes investment performance survey done by Actuarial Services EA Ltd.

Analysts said the purchase of the Umeme shares by the CBK Pension Fund is likely to signal confidence to investors in the company’s prospects because pension funds are usually conservative in the investments they make.

“From a portfolio perspective it could be for diversification with regard to sector and country risk. It signals to other investors confidence in the Uganda utility sector,” said Vimal Parmar, head of equity research at Burbidge Capital, a corporate finance advisory firm .

Actuarial Services EA Ltd said that over the past six months, pension schemes increased their investment in offshore assets to 4.5 per cent in the second quarter of 2013 from 3.8 per cent in the first quarter.

The company analysed results from 110 schemes with a total fund size of Ksh137.8 billion ($1.5 billion) whose investments in fixed income stood at 54.8 per cent of the total portfolio compared with 60.9 per cent in the first quarter of 2013.

Last week, Umeme announced that it had posted a 52.87 per cent rise in after tax earnings on increased revenues and a drop in finance costs for the half year period ended June this year.

READ: Umeme posts 53pc growth in half year profit after tax

Its profit after tax rose to Ush47.33 billion ($18.2 million) in the first six months of this year compared with Ush30.96 billion ($12.5 million) posted over the first six months of last year.

Burbidge Capital this month placed a buy rating on Umeme’s shares which are cross-listed on the Nairobi Securities Exchange.

The rating is based on expected growth in power demand, a low electrification rate in Uganda that provides opportunities from higher expected penetration and Umeme’s monopolistic positioning with a dominant market share and increasing customer connections to drive unit sales.

Its shares last traded at Ush360 ($0.14) at the Kampala bourse, a 30.91 per cent gain when compared with Ush275 ($0.10), its opening price at the start of this year, making it the best performing stock on the USE.